Income Taxes |
3 Months Ended |
|---|---|
Mar. 28, 2020 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes |
Accounting Standards Codification 740 (“ASC 740”) requires companies to apply their estimated annual effective tax rate on a year-to-date basis in each interim period. These rates are derived, in part, from expected annual pre-tax income or loss. In the thirteen weeks ended March 28, 2020 and the thirteen weeks ended March 30, 2019, the Company applied an estimated annual effective tax rate to the interim period pre-tax loss to calculate the income tax benefit or provision.
On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) into law. The CARES Act provides a stimulus package intended to address the impact of the COVID-19 pandemic on the American economy and provides tax relief for businesses. The Company continues to analyze the available benefits and has recognized income tax benefits including the deferral of certain payroll taxes, accelerated Alternative Minimum Tax income tax refunds, and increased business interest deductions.
For the thirteen weeks ended March 28, 2020, the effective income tax rate was 48.8%. The Company recorded income tax benefit for the thirteen weeks ended March 28, 2020 of $9,290. The effective tax rate for the thirteen weeks ended March 28, 2020 was primarily the result of the stimulus provided with the CARES Act. The CARES Act provides the Company a benefit for increased business interest deductions for 2019 and 2020. The Company has recorded a $6,700 income tax benefit for the period ended March 28, 2020 related to the increased business interest provision for 2019. Although the CARES Act provided increased business interest deductions, the Company remains limited in deducting its interest expense. Consistent with prior recent periods, the primary impact of the effective tax rate differential for the thirteen weeks ended March 28, 2020 was due to the Company recording a valuation allowance on its interest limitation carryforward. In addition to the interest limitation, the effective income tax rate differed from the federal statutory tax rate for the thirteen weeks ended March 28, 2020 due to certain non-deductible expenses and state and foreign income taxes.
The effective income tax rate for the thirteen weeks ended March 30, 2019 was (15.8)%. The Company recorded an income tax provision for the thirteen weeks ended March 30, 2019 of $4,800. The negative effective tax rate for the thirteen weeks ended March 30, 2019 was a result of the Global Intangible Low-Taxed Income ("GILTI") and the IRC Section 163(j) interest limitation. Consistent with prior periods, the primary impact of the effective tax differential for the thirteen weeks ended March 30, 2019 was due to the Company recording a valuation allowance on its interest limitation. In addition, the effective income tax rate differed from the federal statutory rate in the thirteen weeks ended March 30, 2019 due to certain non-deductible expenses and state and foreign income taxes.
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